It has been reported that, a second largest ethylene maker from Korea, Honam Petrochemical Corp, will buy 72 per cent stake in Malaysia's Titan Chemicals Corp Bhd where a prominent Malayisia’s investment agency namely Permodalan Nasional Berhad (PNM) is a one of the major shareholders.
Report also says 72 per cent stake that to be taken over by Honam are combination shares which owned by PNB, Amanah Raya Trustees Bhd and The Chao Group (a Taiwaineese company).
By acquiring 72 per cent stake from those vendors, it will enable Honam to proceed unconditional take over offer for the shares which not owned by them especially from the minority shareholders as the objective of Honam is to fully control Titan.
The price to be paid by Honam is RM2.35 per share. The closed price of Titan was 1.83 before suspension last week and the NAV, in turn, is RM2.42. It is still good buy for Honam as the purchase price still lower than NAV.
We expect that, the shares of Titan will be requoted next week and the offer price by Honam (RM2.35) will be a target market price.
Titan is recommended to buy, but the question is at what price should investors buy?
It is difficult to determine the specific price to buy as we expect the price will move fast or jump. Nevertheless, investors can buy as long as the price is below than RM2.35 and if investors think that the differences is worthwhile.
Investors will gain by reselling via open market or by accepting the unconditional take over offer from Honam.
- Sabri Jalil
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